As Washington Post Writers Group columnist Jim Hoagland put it in describing the Asian economic crisis, "the chickens of globalization are coming home to roost in Asia."

The roots of the Asian problem can be traced back to misguided economic management. Protectionist policies, coupled with strong government support and subsidies for particular industries and companies, often rewarded the politically well—connected at the expense of ordinary citizens. Billions of dollars went into misdirected investments.

Since 1990 hundreds of billions of dollars' worth of investment and loans was extended to the Asian economies. To turn a quick investment profit, Western financial and industrial interests shifted production and labor from high—cost Western countries to cheap labor found in abundance throughout Asia.

But, instead of sharing the wealth and helping develop middle classes in these poorer Southeast Asian countries, elites in the target countries manipulated their wealth and diverted loans and investment into pet projects. Real—estate speculation grew rampant. Columnist Hoagland observes that a "get—filthy—rich—quick" mentality was evident within many of the national elite.

Throughout Southeast Asia and in China, vast factories greatly expanded production capacity, and gleaming skyscrapers were built. But the countries lacked consumers with enough money to buy the glut of newly manufactured goods, and the skyscrapers lacked clients to occupy them. The region's potential for its own consumer spending to absorb goods evaporatedor was never developed.

Now, however, this great speculative bubble has burst. Asian banks and financial institutions are saddled with billions of dollars of bad loans and properties that have plunged in value. Reflecting these losses, overseas stock markets and currencies have also plummeted. Unemployment is mounting as businesses falter and fail.

Business Week warned that the prescription to cure the Asian economic problems may make them spread. "The danger is that IMF [International Monetary Fund] prescriptions will intensify the deflationary pressures that are beginning to squeeze the global economy . . . Prices are declining in China, Japan, and much of the rest of the world . . . Currency devaluations not only lower consumer buying power but also unleash new waves of exports on international markets, further depressing prices."

Once financial instability begins to migrate globally, severe scenarios are possible, even for the richest multinational companies. In 1994 John F. Welch, chief executive officer of General Electric, predicted: "The shakeouts will be more brutal, the pace of change more rapid." He likened the world's economic future to "a hurricane."